Govt shutdown to bog down US economy temporarily: warns Powell

The U.S. Federal Reserve on Wednesday decided to lower the target range for the federal funds interest rate by 25 basis points to 3.75 to 4 percent, marking its second rate cut this year. As per information,  economic activity has been expanding at a moderate pace, job gains have slowed this year, and the unemployment rate has edged up but remained low through August, the Federal Open Market Committee (FOMC) said in a statement after a policy meeting. The FOMC, the principal monetary policymaking body of the Federal Reserve System, said it seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run.The rate cut comes as the Fed struggles with a paucity of reliable economic data due to the federal government shutdown, which began on Oct. 1.
Federal Reserve Chair Jerome Powell said that he expects an ongoing government shutdown to bog down the world's biggest economy temporarily, after the central bank announced its second straight interest rate cut this year. Powell cautioned that "a further reduction in the policy rate at the December meeting is not a foregone conclusion. Far from it, policy is not on a preset course." Talking of inflation, Powell said inflation was not looking too bad if taking tariffs out of the equation. "Inflation, away from tariffs, is actually not so far from our 2 percent goal.Powell said that the shutdown, now the second longest in US history, will weigh on economic activity as the stoppage also delays the release of economic data.